Tech Stocks Rally Lifts Nasdaq and Erases 2% Loss In S&P 500

Barry Adams
05 Jul, 2022
New York City

U.S. stocks staged a afternoon rally led by tech stocks after interest rates eased. 

The S&P 500 index increased 0.16% to 3,831.39 and the Nasdaq Composite index gained 1.75% to 11,322.25. 

After a three-day weekend, investors returned with recession anxieties and global economic slowdown worries and stocks opened lower and stayed in the negative territory in the first two hours of trading. 

However, the weakness in the bond yields energized traders in tech stocks and the tech-heavy Nasdaq Composite gained momentum. 

The yield on 10-year U.S. Treasury notes declined 10 basis points to 2.812%. 

The steady advances in tech stocks supported a turnaround in the S&P 500 index but the rally failed to broaden.   

Investors are awaiting the jobs report on Friday and the release of Fed's latest minutes of meeting on Wednesday. 

President Biden's administration is negotiating with Chinese cabinet members in rolling back Trump era tariffs on imported goods from China and ease inflation burden on consumers. 

The decision on tariff rollback is expected as early as this week. 

Futures of crude oil plunged 8% to $99.51 a barrel and natural gas plunged 4.2% to $5.49 a unit. 

The crude oil futures plunged below $100 a barrel for the first time since May 11 after spiking as high as $130.50 a barrel in March following Russia's Ukraine invasion and the international price of oil spiked to $140 a barrel. 

Natural gas markets are bracing for another delivery shock starting as early next week. 

Russia announced to completely halt all gas deliveries through Nordstream 1  beginning next Monday for 10 days for planned maintenance. 

Moreover, Norwegian gas workers went on a strike over a pay dispute forcing the state controlled Equinor to shut down three oil fields in the North Sea. 

Three gas fields produce the equivalent of 89,000 barrels of oil a day with about 30% of output in natural gas, Equinor said in a press release. 

September Futures of natural gas prices soared as much as 5% or to 172 euros before settling at a lower level of 165 euros per megawatt hour, price feed from the Intercontinental Exchange showed. 

Energy stocks led the decliners after crude oil prices plunged in the early trading. 

Exxon Mobil Corp declined 4.5% to $83.71, Chevron dropped 4.2% to $140.35, and Occidental Petroleum fell 4.8% to $57.52. 

Halliburton, Marathon Oil, Schlumberger, EOG Resources, and ConocoPhillips declined more than 7.0%.  

Yum Brands declined 1.1% to $114.45 and the owner of fast food chains said the company is close to selling its operations in Russia. 

The U.S. dollar advanced against world currencies on rising fears of global slowdown and higher rate expectations in the U.S. 

Global recession worries were front and center in today's trading and the euro accelerated its decline in the year so far and plunged to a two decade low. 

The euro declined 1.3% to $1.029 and extended this year's loss to 9% after skyrocketing energy prices has driven inflation in the currency zone to a four-decade high.

In the year so far, the euro has fallen 13.8% and the British pound has declined 13.6% against the U.S. dollar.  

The U.S. dollar has been gaining ground against currencies around the world after the Federal Reserve lifted rates two times this year and set the expectations for more hikes during the year. 

Europe's proximity to the Ukraine war, four-decade high inflation, and interest rates lagging the U.S. has driven the euro to a two-decade low. 

The British pound fell 1.5% to $1.193 after two cabinet ministers resigned in protest of Prime Minister Boris Johnson's leadership. 

U.K. Prime Minister Boris Johnson suffered a serious blow after two top senior ministers offered their resignations.  

Finance Minister Rishi Sunak resigned after the latest scandal rocked Downing Street involving Tory deputy chief Chris Pincher. 

Four days ago Pincher resigned from the government over allegations that he groped two men at a private member's club. 

"The public rightly expect government to be conducted properly, competently and seriously.

 I recognise this may be my last ministerial job, but I believe these standards are worth fighting for and that is why I am resigning.," said Sunak in a letter published on his twitter account. 

"It has been an enormous privilege to serve in this role, but I regret that I can no longer continue in good conscience," Health Secretary of State & Social Care Sajid Javid tendered his resignation and said in a letter submitted to prime minister Johnson and published on twitter. 

 

European Markets Drop 2% 

Market indexes in Europe dropped more than 2% as fears of a recession escalated in the union on soaring inflation and no end in sight of a war in Ukraine.  

The DAX index fell 2.4% to 12,464.54, the CAC-40 index declined 2.4% to 5,810.58, and the FTSE 100 index dropped 2.6% to 7,047.26. 

Market worries were compounded after coronavirus infections flared up in easter region of China and local authorities imposed mass testing in at least three cities. 

Scandinavian Airlines SAS AB dropped 10.5% to 55 krona cents after the company sought bankruptcy protection in a U.S. court to accelerate its restructuring plan. 

Delivery Hero SE gained 1.5% to 35.69 euros after the delivery services provider said it has completed the acquisition GlovoApp23 S.A.

J Sainsbury Plc increased 1.1% to 210.68 pence after the retailer confirmed its full-year outlook. 

The retailer said total sales excluding fuel sales declined 4.5% in the sixteen week period ending on June 25. Grocery sales were down 2.4% in the period. 

The company confirmed  fiscal year 2022-23 underlying profit before tax of between